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Case 5 - Cash flow Statement (20 points) Pipo and Lala formed a partnership to sell skin care products made from organic ingredients. They have
Case 5 - Cash flow Statement (20 points) Pipo and Lala formed a partnership to sell skin care products made from organic ingredients. They have been operating for one year. The bank balance at the end of the year is $41 000. A summary of business transactions is as follows: Sales to customers 256,000 Receipts from customers 199,000 Payments for inventory 103,000 Payments for electricity, telephone, rent and insurance 5,000 Purchase of a motor vehicle 30,000 Drawings 50,000 Payment of interest I 8,000 Loan proceeds 20,000 Interest received 1,000 Income taxes paid 3,000 Equity Injection 20,000 (a) Prepare a statement of cash flows (10 points) (b) Pipo and Lala Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to make sure the next quarter's performance was better. As a marketing manager, what would be your advice to Finance manager? (5 points) (c) As a marketing manager, which of company financial statements (Balance Sheet, Income, Cash flow) is the most useful? Explain your reasons! (5 points)
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